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What is Conversion Rate in Business? The Science of Earning Customers

Laduram Vishnoi
6 min read
What is Conversion Rate in Business? The Science of Earning Customers

Conversion rates vary by industry. They are subjective; a successful conversion rate for Company A might be a weak one for Company B. That’s why it’s important to understand how conversion rates pertain to your industry and individual business.

Does your business have a conversion rate goal that you’re struggling to reach? Are you unsure of the best next step to optimize your website for conversion? No matter which scenario you face, we’ll show you how to calculate conversion rates, compare your company’s numbers to the competition, and how to boost conversions the smart way—because if they’re anything less than 100%, there’s room for improvement.

Developing a Conversion Optimization Plan

Let’s start with the basics. A conversion rate refers to the percentage of visitors to your website or landing page that complete a tracked action.

The conversion rate equation is simple. Divide the number of completed actions by the total number of opportunities or number of visitors. Then multiply this number by 100.

Conversion Rate formula
Image Source - WPExplorer

For example, if your ecommerce site had 500 visitors last month and 100 sales, your conversion rate would be 20%.

100 / 500 x 100 = 20

Conversion rates don’t only apply to sales. If you’re trying to grow your email list and collect 50 new email addresses after asking 1,000 visitors, your conversion rate is 5%.

50 / 1000 x 100 = 5

Calculating conversion rates is simple. Interpreting them—not so much. If you’re converting a high percentage of website visitors to newsletter subscribers, your conversion rate may seem impressive. But if your site isn’t bringing in your target audience, your newsletter campaign is falling on deaf ears. On the other hand, a low conversion rate may seem disappointing. But it’s better to have 50 true fans than 1,000 disengaged followers.

Now that we know how to calculate conversion rates, we need to understand optimization—or the act of improving your website to boost conversion rates.

Over 60% of companies admit to not having a structured approach to optimization. When it comes to optimizing your website for conversions, having a detailed plan in place is crucial. Follow these steps to begin developing a conversion optimization plan of your own.

Choose your metrics

Conversion rates aren’t just about sales. A conversion can refer to any desired action you want the user to take. Depending on your industry, audience, product/service, and goal, your conversion rate may focus on an entirely different action. Here are a few to consider.

  • Sign-ups (newsletter, email, free trials) – Having a steady stream of leads to nurture depends on sign-ups. Is your conversion offer attractive enough?
  • Traffic sources – You want multiple sources of traffic. But chances are, one source caters to your target audience more than the others. Are your top traffic sources bringing the right people to your website?
  • Return visitors – How many unique visitors come back to take another look around? Improving this conversion rate may require Google Analytics testing.
  • Session duration – What does an optimal browsing session look like? Determine your conversion rate in this situation using visitors who exceed your session duration minimum.
  • Engagement – Whether you want to increase the number of new visitors who engage with your chatbot or fill out your contact forms, focusing on your engagement conversion rate is always beneficial.

Choosing which action to track isn’t a matter of preference. The decision should be based on your business needs and target audience. Your target audience might not want a free trial of your service. Instead, getting them to engage could be the better approach.

Set a goal

Now that you know what you want to track, set a conversion rate goal. Be specific with your goal and set a deadline. Instead of saying that you want to improve email sign-ups, have a goal of increasing email sign-ups of return visitors by 0.5% over the next two months.

Bring in a professional

Did you design your own website? Write all of your own copy? Pack every shipment? Chances are, you have multiple teams to handle your company’s daily tasks. The same can be said for optimization. You may not need more hands to get the job done, but you may need more experienced ones.

We know the next question that’s coming. What’s a good conversion rate? While there is an average conversion rate for every industry and minimum percentages to shoot for, there is no universal answer.

Rather than measuring your success with a target percentage, focus on overall improvement. Increasing your conversion rate is great. But improving the quality of your conversions is even better.

How does your conversion rate stack up against your industry average? Image source: Euro 3 Plast

How to Boost Conversion Rates - 4 Tested Techniques

How do you optimize your website to improve conversion rates? There is no shortage of opinions on conversion rate optimization.

We’ve pulled together some of our favorites to help you improve your overall user experience and quality of conversions. Don’t try to take on every tip at once. Instead, start working towards a higher conversion rate by focusing on one desired action at a time.

1. Revamp your offer.

What are you offering your website visitors in exchange for their contact information? If you have low conversion rates with your free offer, there’s a good chance it’s not what your audience wants.

For example, are you offering generic information accessible with a simple Google search? Or are you offering readers a chance to grow with your content?

Provide more than one offer. A/B testing different types will help you learn what your audience wants. Maybe you’ve put together a thorough webinar with plenty of great information. But if your audience doesn’t respond to a webinar, try reformatting the information into a video they can watch on their own time.

 2. Optimize your website design and user experience.

There have been many studies on what readers do when you change the color of a button or use a different font in a pop-up ad on your product pages. Sure, there are psychological effects behind online advertising design. But what’s more important to focus on if you have low conversion rates is user experience and personalization.

Most online visitors prefer a minimalistic approach to website design. Flashy banners on the homepage aren’t bringing in leads. They’re deterring them.

New visitors to your site stick around for less than 15 seconds. That’s all you get to make a great first impression, and there’s no room for error. If you want to know what users think of your site, just ask. Send out a survey and see what type of feedback you get. You can also head to, where you can gain SEO insights on user behavior as visitors navigate your website.

If you’re making it difficult for potential customers to focus on what your website is trying to sell them or they can’t find the right landing page to move through your conversion funnel, it’s time to optimize your website design for simplicity and user-friendliness.

3. Lights, camera, action.

Videos sell, yet many companies still shy away from them. If your written content isn’t sealing the deal with your visitors, see if a video provides the final push they need to convert.

You don’t need a fancy backdrop or expensive equipment. Your smartphone and a quiet room are enough. If you’re camera shy, let a charismatic employee do the talking. If you have the budget, you can have a professional animated video designed and produced.

4. Call a bit louder.

Are a large number of people visiting your site not converting because you’re not asking them to? A website that doesn’t clearly state its intent will always have a low conversion rate.

Look at every page of your website. Is it asking the reader to do what you need them to do? Whether it’s to call for an appointment, complete a contact form, or download your ebook, don’t be afraid to make your request known.

Also make sure that it’s easy for your visitors to complete the task you’re asking them to do. They shouldn’t have to look for a contact form or track down a link.

The number of conversions you secure is directly linked to your sales and profits. If you remain authentic, transparent, and dedicated throughout the optimization process, you’re sure to see your conversion numbers increase—and for all the right reasons.

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